Cook County Proposes $3.5B No-New-Tax Budget

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CHICAGO — Cook County, Ill. President Toni Preckwinkle proposed a $3.5 billion fiscal 2014 budget that plugs a $152 million shortfall with no new taxes or fees, a feat she attributes largely to the new federal health care law.

Cook, the third largest county in the U.S., operates one of the country's largest health systems, which has faced chronic shortfalls for years.

The all-funds budget is up 8.8% over the current spending plan. The general fund and health fund budget totals $2.5 billion, up 10% from the 2013 budget.

"After three years of tough and difficult budgets, today I can present a budget with no new taxes, no new fees or fines," Preckwinkle, who took office in 2010, told the 17-member county board of commissioners. "This plan presented today is not only a balanced budget, it is an investment in the long-term health and stability in our government."

The budget features the final phase of a four-phase rollback of a 1% increase the county's sales tax implemented by Preckwinkle's successor. She campaigned and won the office in part on a promise to eliminate the deeply unpopular tax.

"Having the highest sales tax in the country was detrimental to our working families and our businesses," Preckwinkle said. "But just because I knew it was the right thing to do, doesn't mean it was easy. It meant losing a valuable source of revenue in tough economic times."

The $152 million deficit is due largely to the sales tax decrease — an estimated $60 million loss — as well as mandated expenses for public safety, according to Preckwinkle. It's down from the $267 million gap last year and the $315 million deficit a year earlier.

The shortfall was offset by about $90 million from expected reimbursement increases in the health system, $24 million of cuts, and a slight increase in revenues due to increased collections.

The hospital system accounts for more than one third, or $1.25 billion, of the full county budget. Last year the county requested and won a waiver from the federal government that allowed it to expand its Medicaid program a year ahead of the formal 2014 start of the new federal health care law.

That move, along with the savings expected with the start of the new law this year, will bring in nearly $280 million in revenue, more than half of the $500 million in uncompensated care the county spends annually.

"The Affordable Care Act has had a huge impact on Cook County," Preckwinkle said.

The proposed spending plan does not address the county's looming pension crisis. Cook has one of the largest ratios of adjusted net pension liabilities to revenue in the country. The county has $5.8 billion of unfunded obligations for a funded ratio of 57.5% and the recently downgraded Cook County Forest Preserve District has a $111 million for a funded ratio of 61.1%.

As in similarly troubled Chicago, Cook County officials are restricted from acting on pension changes until the state enacts reform.

Meanwhile, a judge last week ordered the county to stop collecting a new tax that it began to levy last year. The ruling bans the county from imposing a use tax on big-ticket, non-titled items, such as furniture and office supplies that are sold outside of Cook County but used by businesses located inside the county. The county may appeal to the ruling. It means the loss of just under $12 million annually, according to county officials.

Standard & Poor's rates the county AA. Fitch Ratings rates it AA-minus and Moody's Investors Service rates it A1. Both Fitch and Moody's have negative outlooks.

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Illinois
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